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Response to FCA's Consultation: Approach to Consumers

We believe the FCA can deliver further improvements to the experiences of vulnerable customers

StepChange Debt Charity welcomes the opportunity to respond to this consultation on the Financial Conduct Authority’s (FCA) Future Approach to Consumers.

StepChange Debt Charity is the largest specialist debt advice charity helping people across the UK. In 2017, we helped 620,000 people with their debts.

Through our services, we see how a combination of adverse circumstances, poor options and the conduct of financial services providers can increase consumers’ vulnerability to debt and make financial difficulties harder to deal with. In the first half of 2017, we supported 14,484 people who identified as vulnerable, representing 17.6% of the total number of telephone clients during that period. We therefore welcome the FCA’s Consumer Approach document, and the ambition set out in this to improve outcomes for consumers, particularly those who are vulnerable.

The Consumer Approach builds on important progress in recent years

The FCA’s Occasional Paper on Consumer Vulnerability and subsequent work have impacted not only on the financial services sector, but have also led to positive impacts in other sectors, which have followed the lead of the FCA. In some cases, these sectors have begun to go further, for example Ofgem’s introduction of a generalised principle of vulnerability into its rules. This shows how important it is that the FCA continues to prioritise vulnerable consumers, and lead the way in improving how firms identify and respond to their needs.

The Consumer Approach document challenges us all to think carefully about complex issues regarding vulnerability and regulation. This is much needed and we appreciate the willingness of the FCA to have genuine conversations and consultation on how to get the right outcomes for vulnerable consumers, and create a market that works for them.

To achieve this, we all need to understand and view the market from the perspective of vulnerable consumers

As we will set out in our response, by considering the vision for a well-functioning market in this way, and adopting a more social model of disability, we believe the FCA can build on the progress to date and deliver further, necessary improvements to the experiences of vulnerable consumers.

Finally, by framing the vision set out in the Consumer Approach as ‘aspirational’, we are concerned that the FCA may be undermining the vast progress made to date and the potential for further improvements to be made. Whilst we appreciate this is not the intention, it suggests a market which protects consumers, particularly those who are vulnerable, can only be ‘aspired to’ rather than delivered.

We hope that, going forward, the FCA will give a clear expectation that this vision is achievable, and will be worked towards as a priority. As we set out in our response, we believe this should include:

Making it clear that consumers cannot be expected to take responsibility in all situations – particularly where they may be vulnerable, or where there is complexity or uncertainty. This includes making it clear that a consumer cannot take responsibility unless a firm has treated them fairly.

Recognising the role that firms’ relationship with their customers can play in exacerbating vulnerability, and therefore the importance of firms proactively identifying vulnerable individuals and designing products and services that meet their needs.

Rethinking the proposed new definition of vulnerability set out in the Approach document so that it builds on, rather than risks, the progress that has been made to date.

Ensuring vulnerable consumers are given appropriate weight in cost-benefit analysis.

Making clear what a well-functioning market means for vulnerable consumers, and measuring against this.